SEC - The United States Securities and Exchange Commission
09/12/2024 | Press release | Distributed by Public on 09/12/2024 14:37
Litigation Releases (Marg Patel, Robert Horowitz, and Chintankumar Bhatt)
Marg Patel, Robert Horowitz, and Chintankumar Bhatt
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26104 / September 12, 2024
Securities and Exchange Commission v. Marg Patel, Robert Horowitz, and Chintankumar Bhatt.
No. 1:24-cv-06405 (E.D.N.Y. filed Sept. 12, 2024)
SEC Charges Three Former Medly Health Inc. Executives with Defrauding Series Investors
The Securities and Exchange Commission today charged now-defunct digital pharmacy startup Medly Health Inc's. co-founder and former CEO, Marg Patel, former CFO, Robert Horowitz, and former Head of Rx Operations, Chintankumar Bhatt, with defrauding investors in connection with capital raising efforts that netted the company over $170 million.
According to the SEC's complaint, from at least February 2021 through August 2022, Patel and Horowitz provided financial information to existing and prospective investors that fraudulently overstated Medly's revenue due in part to millions of dollars' worth of fake prescriptions entered into the company's systems by Bhatt. The SEC's complaint alleges, among other things, that Patel and Horowitz knew of, but failed to correct, significant accounting irregularities and were aware of several reports and complaints by employees that the revenue reported in Medly's financial statements to investors was inaccurate.
The SEC's complaint, filed in the U.S. District Court for the Eastern District of New York, charges Patel and Horowitz with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933("Securities Act"), and Section 10(b) of the Securities and Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and charges Bhatt with violating the antifraud provisions of Sections 17(a)(1) and 17(a)(3) of the Securities Act and Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder, as well as aiding and abetting Patel's and Horowitz's violations of Section 17(a)(2) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5(b) thereunder. The SEC seeks permanent injunctions, civil money penalties, disgorgement with prejudgment interest, and officer-and-director bars against all three defendants.
The SEC's investigation is ongoing and is being conducted by Suzanne M. Bettis, Heather Marshall Molavi, Lisa Knoop, and Christopher M. Colorado of the New York Regional Office. It is being supervised by Judith A. Weinstock and Sheldon L. Pollock, and Antonia Apps. The litigation will be led by Mr. Colorado, Ms. Bettis, and Ms. Marshall Molavi, under the supervision of Alex Vasilescu.